the international use of the renminbi: evidence from the

The International Use of the Renminbi: Evidence from Japanese Firm-Level Data

RIETI-IWEP-CESSA JOINT-WORKSHOPRMB INTERNATIONALIZATION

14 DECEMBER 2015

Kiyotaka Sato & Junko Shimizu

Motivation• The use of the Chinese renminbi (RMB) has been

increasing in recent years for trade invoicing, due to active promotion policies by the Chinese government.

• Since China plays a role of regional and global manufacturing hub and foreign multinational companies (MNCs) actively operate in China, it is necessary to investigate to what extent MNCs use RMB for trade invoicing especially in their intra-firm trade.

• However, no firm-level empirical evidence has been presented.

This Paper’s Contribution• Utilizing the firm-level information obtained by the large-

scale questionnaire surveys in 2010 and 2014, this study presents the new evidence of the use of RMB by Japanese MNCs operating in China and ASEAN countries.

• We found the following results:• Although RMB is extensively used for local sales and procurement

in China, Japanese MNCs in China mainly use the U.S. dollar and yen in trade with other countries.

• Japanese MNCs in China increased the use of RMB in intra-firm trade with Japan.

• The RMB transactions will be growing further if it becomes easier for MNCs to conduct marry and netting for their trade settlement.

CONTENTS

• Overviews of RMB internationalization• Difference in Internationalization between Yen and RMB

• Questionnaires Surveys of Japanese Overseas Subsidiaries• What Impedes RMB Transactions

• Invoice Currency Choice in Japanese Production Subsidiaries• Share of Invoice Currency in Asia• Share of Invoice Currency in Intra-Firm Trade

• Concluding Remarks

RMB internationalization• Many policy reforms aimed at increasing the use of RMB

in cross-border transactions have been implemented by Chinese government.

• At the same time, the RMB related deposits, bonds, and derivatives in offshore markets have been expanding.

• Accordingly, the RMB internationalization has been promoted by both policy-driven efforts and market-driven forces.

• According to Eichengreen and Kawai (2014), the RMB internationalization has started by focusing the use of the currency for trade-related purposes.

Recent RMB internationalization Policies

• Bilateral currency swap agreements with various countries• To provide RMB liquidity for

trade and direct investment• 32 swap arrangements with

worldwide foreign central banks (As of May 2015)

• Promote cross-border trade and direct investment in RMB

• Pilot scheme for use of the RMB in trade settlement

• Direct RMB trading with non-US dollar currencies

• Offshore market RMB (CNH)

• Official RMB clearing banks now appointed in 15 countries across Asia, Europe, Middle East, and North and South Americas (as of Nov 2015)

OTC Foreign Exchange Turnover (BIS, 1998-2013)

05

101520253035404550

1998 2001 2004 2007 2010 2013

(Daily average,1 billion US$) China Indonesia Malaysia Philippines Thailand

The Volume and Share of the RMB Trade Settlement

024681012141618

020406080100120140160180

Q1 2010

Q2 2010

Q3 2010

Q4 2010

Q1 2011

Q2 2011

Q3 2011

Q4 2011

Q1 2012

Q2 2012

Q3 2012

Q4 2012

Q1 2013

Q2 2013

Volume of Cross‐Border RMB Trade Settlement (left axle)

Share of the PRC's RMB Trade Settlement in the PRC's Total Foreign Trade (right axls)$ billion %

Sources: Eichengreen and Kawai (2014)Data: CEIC, PRC Premium Database; International Monetary Fund, Direction of Trade Statistics.

Difference in Internationalization between RMB and Yen

• Since 2009, Bilateral currency swap agreements with various countries

• Pilot scheme for use of the RMB in trade settlement(2009)

• Offshore market RMB (CNH)

• Direct RMB trading with non-US dollar currencies

• Official RMB clearing banks

• 1960: Free Yen Accounts for nonresidents

• 1980: Amendment of Foreign Exchange and Foreign Trade Control Act

• 1984: Abolition of the real demand

• 1998:Amendment of Foreign Exchange and Foreign Trade Act

Rapid and aggressive promotion Cross-border trade settlement Strong expectation of RMB

appreciation

Reluctant to internationalize the yen for trade settlement in the 1980s

Convertibility and capital openness Prolonged stagnation of Japanese

economy

Questionnaire surveys of Japanese Overseas Subsidiaries in 2010 and 2014

• Subsidiaries are chosen from the Toyo Keizai’s Overseas Japanese companies database (the “OJC database”).

• Questionnaire items focus on:• (i) exchange rate risk management of overseas subsidiaries.• (ii) the choice of invoice currency by source and destination, by trading partner (intra-firm or

arm’s length).

RIETI Questionnaire survey 2010:Sent to 16,020 ⇒1,479 (9.2%)Asia, Oceania, North America, Europe

RIETI Questionnaire survey 2014:Sent to 18,932 ⇒1,640 (8.7%)Asia, Oceania, North and South America, Europe

Comparison of the Respondents

アジア・大洋州, 864, 53%北米, 365,

22%

南米, 52, 3%

欧州（ユー

ロ圏）, 222, 14%

欧州（非

ユーロ圏）, 137, 8%

回答企業の地域分布（2014年調査）

アジア・大洋州, 848, 57%

北米, 364, 25%

欧州（ユー

ロ圏）, 172, 12%

欧州（非

ユーロ圏）, 95, 6%

回答企業の地域分布（2010年調査）

回答企業数：1,479社


製造業（化

学）, 140, 8% 製造業（機

械）, 110, 7%

製造業（電気

機器）, 157, 10%

製造業（輸送

機器）, 121, 7%

製造業（その

他）, 278, 17%

卸売業（総

合）, 77, 5%

卸売業（機

械）, 134, 8%

卸売業（電気

機器）, 202, 12%

卸売業（輸送

機器）, 78, 5%

卸売業（その

他）, 264, 16%

統括会社, 79, 5%

回答企業の業種分布（2014年）


製造業（化

学）, 125, 8% 製造業（機

械）, 97, 7%

製造業（電気

機器）, 150, 10%

製造業（輸送

機器）, 136, 9%

製造業（その

他）, 276, 19%

卸売業（総

合）, 29, 2%

卸売業（機

械）, 144, 10%

卸売業（電気

機器）, 199, 13%

卸売業（輸送

機器）, 50, 3%

卸売業（その

他）, 233, 16%

統括会社, 40, 3%

回答企業の業種分布（2010年）

回答企業数：1,479社 11

Problems of invoice currency used for int’l tradeProblems of invoice currency used for international trade (# of firms to answer "yes")

Answers in 2010

Foreign currency

Currency that the

firm suffers problems

Problems (multiple answers)

Currency the firm uses in trade

transactions

Foreign exchange

control regulation

s hinder non-

residents' transactions of the currency

Capital controls

and restrictions hinder the operation

al hedging (marry

and netting)

Raising and

investment of funds

in that currency

High transactio

n costs involved

with currency hedging

High foreign

exchange volatility

Others

US Dollar 1,224 714 31 - 40 84 608 39 (86.0) (58.3) (4.3) (5.6) (11.8) (85.2) (5.5)

Euro 484 236 7 - 6 28 210 11 (34.0) (48.8) (3.0) (2.5) (11.9) (89.0) (4.7)

Japanese yen 920 654 29 - 21 84 593 25 (64.6) (71.1) (4.4) (3.2) (12.8) (90.7) (3.8)

Chinese Yuan 149 76 32 - 28 8 20 2 (10.5) (51.0) (42.1) (36.8) (10.5) (26.3) (2.6)

Hong Kong Dollar 83 18 2 - 1 2 14 2 (5.8) (21.7) (11.1) (5.6) (11.1) (77.8) (11.1)

Taiwan Dollar 44 14 1 - 2 2 12 0 (3.1) (31.8) (7.1) (14.3) (14.3) (85.7) (0.0)

Korean Won 22 10 0 - 0 1 9 0 (1.5) (45.5) (0.0) (0.0) (10.0) (90.0) (0.0)

Singapore Dollar 143 45 2 - 4 8 36 2 (10.0) (31.5) (4.4) (8.9) (17.8) (80.0) (4.4)

Malaysian Ringgit 55 24 6 - 4 1 14 0 (3.9) (43.6) (25.0) (16.7) (4.2) (58.3) (0.0)

Indonesia Rupiah 41 26 1 - 0 3 22 3 (2.9) (63.4) (3.8) (0.0) (11.5) (84.6) (11.5)

Thai Baht 137 49 3 - 6 5 38 5 (9.6) (35.8) (6.1) (12.2) (10.2) (77.6) (10.2)

Philipines Peso 23 10 2 - 0 1 7 1 (1.6) (43.5) (20.0) (0.0) (10.0) (70.0) (10.0)

India Rupee 13 6 2 - 2 1 2 1 (0.9) (46.2) (33.3) (33.3) (16.7) (33.3) (16.7)

RIETI Questionnaire Survey 2010 "Questionnaire Survey on the Choice of Invoice Currency by Japanese Overseas Subsidiaries"

Problems of invoice currency used for international trade (# of firms to answer "yes")

Answers in 2014

Foreign currency

Currency that the

firm suffers problems

Problems (multiple answers)

Currency the firm uses in trade

transactions

Foreign exchange

control regulations hinder non-

residents' transactions

of the currency

Capital controls

and restrictions hinder the

operational hedging

(marry and netting)

Raising and

investment of funds

in that currency

High transactio

n costs involved

with currency hedging

High foreign

exchange volatility

Others

US Dollar 1,266 311 22 18 18 53 247 13 (83.9) (46.6) (7.1) (6.2) (6.2) (18.3) (85.2) (4.5)

Euro 527 87 5 3 4 11 70 3 (34.9) (13.0) (5.7) (3.8) (5.0) (13.8) (87.5) (3.8)

Japanese yen 924 377 15 14 15 51 357 8 (60.4) (40.8) (4.0) (3.7) (4.0) (13.5) (94.7) (2.1)

Chinese Yuan 147 41 12 14 16 10 26 1 (9.6) (27.9) (29.3) (34.1) (39.0) (24.4) (63.4) (2.4)

Hong Kong Dollar 63 4 0 0 0 1 3 0 (4.1) (6.3) (0.0) (0.0) (0.0) (25.0) (75.0) (0.0)

Taiwan Dollar 36 4 1 1 0 2 0 1 (2.4) (11.1) (25.0) (25.0) (0.0) (50.0) (0.0) (25.0)

Korean Won 25 3 0 0 0 1 3 0 (1.6) (12.0) (0.0) (0.0) (0.0) (33.3) (100.0) (0.0)

Singapore Dollar 106 9 0 1 0 2 7 1 (6.9) (8.5) (0.0) (11.1) (0.0) (22.2) (77.8) (11.1)

Malaysian Ringgit 56 12 3 2 2 3 8 1 (3.7) (21.4) (25.0) (16.7) (16.7) (25.0) (66.7) (8.3)

Indonesia Rupiah 53 34 5 0 1 5 31 0 (3.5) (64.2) (14.7) (0.0) (2.9) (14.7) (91.2) (0.0)

Thai Baht 127 23 0 1 2 3 18 1 (8.3) (18.1) (0.0) (4.3) (8.7) (13.0) (78.3) (4.3)

Philipines Peso 18 5 0 0 1 0 4 0 (1.2) (27.8) (0.0) (0.0) (20.0) (0.0) (80.0) (0.0)

India Rupee 28 10 0 1 1 2 6 1 (1.8) (35.7) (0.0) (10.0) (10.0) (20.0) (60.0) (10.0)


Foreign exchange control & regulation hinder non-residents transaction of the currency

Raising and investment of funds in that currency

High foreign High foreign exchange volatility

High foreign High foreign exchange volatility

Capital controls and restrictions

that currency.

Capital controls and restrictions hinder the operational hedging, marry and netting.

Raising and investment of funds in that currency.

Do you have any plan to expand the RMB transaction in future?

Do you have any plan to expand the Chinese yuan' transaction in future?

2010 2014

# of responded Yes No Others # of

responded Yes No Others

Asia 755 16021.2

57275.8

233.0

623 99 15.9

501 80.4

23 3.7

Oceania 43 00.0

43100.0

00.0

44 0 0.0

43 97.7

1 2.3

North America 273 62.2

26296.0

51.8

204 3 1.5

196 96.1

5 2.5

South Americda 20 0 0.0

20 100.0

0 0.0

Europe(Euro area) 109 32.8

10495.4

21.8

121 7 5.8

112 92.6

2 1.7

Europe(non-Euro area) 70 00.0

70100.0

00.0

70 1 1.4

66 94.3

3 4.3

All 1,250 16913.5

1,05184.1

302.4

1,082 110 10.2

938 86.7

34 3.1

RIETI Questionnaire Survey 2010 and 2014 "Questionnaire Survey on the Choice of Invoice Currency by Japanese Overseas Subsidiaries"

AsiaYes, 15.9%

EuropeYes, 5.8%

TotalYes, 10.2%

Do you have any plan to expand the RMB transaction in future? (Answer in 2014)

# of responded

Do you have any plan to expand the Chinese yuan' transaction in future? If you answer "Yes", why is the reason?

Yes No OthersReceipts in the

Chinese yuan are increasing

Payments in the Chinese yuan are

increasing

Chinese Yuan is becoming more tractable as the

currency reforms by Chinese government

are advancing

Others

All Countries 1,082 110 938 34 66 41 21 16 10.2 86.7 3.1

China 151 80 63 8 52 24 11 1353.0 41.7 5.3

Hong Kong 39 10 26 3 6 7 3 025.6 66.7 7.7

Taiwan 46 2 42 2 0 0 1 14.3 91.3 4.3

Korea 22 0 21 1 0 0 0 00.0 95.5 4.5

Shingapore 62 3 56 3 1 1 2 14.8 90.3 4.8

Malaysia 65 1 64 0 0 1 0 01.5 98.5 0.0

Thailand 85 0 82 3 0 0 0 00.0 96.5 3.5

Indonesia 73 0 72 1 0 0 0 00.0 98.6 1.4

Philippines 17 1 16 0 0 1 0 05.9 94.1 0.0

Vetnam 29 2 26 1 2 1 1 06.9 89.7 3.4

India 29 0 28 1 0 0 0 00.0 96.6 3.4


Yes, 25.6%

ChinaYes, 53.0%

HKYes, 25.6%

Receipts in the RMB are increasing.

Payments in the RMB are increasing.

RMB is becoming more

g

RMB is becoming more tractable as the

currency reforms by PRC are advancing.

Do you have any plan to expand the ratio of transactions denominated in the local Asian currency in the future?(Answer in 2014)

Do you have any plan to expand the ratio of transactions denominated in the local Asian currency in the future?

China Hong Kong Taiwan Korea Vietnam Philippines Thailand Malaysia Singapore Indonesia India

# of responded 158 42 48 20 32 18 92 68 65 79 32

Yes 6339.9

716.7

714.6

00.0

618.8

527.8

2223.9

1319.1

1218.5

2227.8

928.1

No 8956.3

3173.8

3879.2

1995.0

2681.3

1372.2

6975.0

5377.9

5178.5

5468.4

2371.9

Others 63.8

49.5

36.3

15.0

00.0

00.0

11.1

22.9

23.1

33.8

00.0

Do you have any plan to expand the ratio of transactions denominated in the local Asian currency in the future? (Answer in 2014)

If you selected “Yes” above, please select the relevant currency or currencies below. (Select all that apply)

China Hong Kong Taiwan Vietnam Philippines Thailand Malaysia Singapore Indonesia India

# of responded 62 6 7 5 5 22 13 12 22 9

Chinese Yuan61 5 3 2 1 1 0 1 0 0

(98.4) (83.3) (42.9) (40.0) (20.0) (4.5) (0.0) (8.3) (0.0) (0.0)

Thai baht1 0 0 1 0 21 5 7 2 1

(1.6) (0.0) (0.0) (20.0) (0.0) (95.5) (38.5) (58.3) (9.1) (11.1)

Korean won0 0 0 0 0 0 0 0 0 0

(0.0) (0.0) (0.0) (0.0) (0.0) (0.0) (0.0) (0.0) (0.0) (0.0)

Hong Kong $1 1 0 0 0 1 0 0 0 0

(1.6) (16.7) (0.0) (0.0) (0.0) (1.0) (0.0) (0.0) (0.0) (0.0)

Singapore $0 1 1 1 1 2 4 4 0 1

(0.0) (16.7) (14.3) (20.0) (20.0) (2.1) (10.4) (6.9) (0.0) (9.0)

Malaysian ringgit0 1 0 0 0 1 10 3 0 0

(0.0) (16.7) (0.0) (0.0) (0.0) (1.0) (26.0) (5.1) (0.0) (0.0)

Indoeshian rupiah1 1 0 0 0 1 2 4 21 0

(1.6) (16.7) (0.0) (0.0) (0.0) (1.0) (5.2) (6.9) (95.5) (0.0)

Philippin peso0 0 0 0 3 0 0 1 0 0

(0.0) (0.0) (0.0) (0.0) (60.0) (0.0) (0.0) (1.7) (0.0) (0.0)

Taiwan $0 1 5 0 0 0 0 0 0 0

0.0 16.7 71.4 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Indian rupee0 1 1 0 0 0 1 2 0 8

0.0 16.7 14.3 0.0 0.0 0.0 2.6 3.4 0.0 88.9

RIETIQuestionnaire Survey 2014 "Questionnaire Survey on the Choice of Invoice Currency by Japanese Overseas Subsidiaries"

CNY vs. CNH Do you have any transactions denominated in Chinese yuan at the moment?

# of responded Yes No

Asia 643 (100.0)

125 (19.4)

518 (80.6)

Oceania 43 100.0

1 2.3

42 97.7

North America 206 100.0

7 3.4

199 96.6

South Americda 20 100.0

0 0.0

20 100.0

Europe(Euro area) 123 100.0

5 4.1

118 95.9

Europe(non-Euro area)

70 100.0

2 2.9

68 97.1

All 1,105 (100.0)

140 (12.7)

965 (87.3)

If you selected “Yes” in the above question, please select which Chinese yuan you use.# of responded CNY (On-shore Chinese yuan) CNH (Off-shore Chinese yuan)

Asia 120 (100.0)

102 (85.0)

18 (15.0)

Oceania 1 (100.0)

1 (100.0)

0 (0.0)

North America 7 (100.0)

4 (57.1)

3 (42.9)

South Americda 0 (0.0)

0 (0.0)

0 (0.0)

Europe(Euro area) 4 (100.0)

4 (100.0)

0 (0.0)


2 (100.0)

2 (100.0)

0 (0.0)

All 134 (100.0)

113 (84.3)

21 (15.7)

CNY 84.3%CNH15.7%

“Do you have any RMB transaction at

the moment?”All 12.7%, Asia 19.44%

Please select the FX market where you transact RMB.Please select the foreign exchange market where you transact the Chinese yuan. (Select all that apply)

# of responded

Foreign exchange market in China Foreign exchange market in Hong Kong Off-shore Chinese yuan-Japanese yen

market in Tokyo Others

Asia 120 (100.0)

101 (84.2)

16 (13.3)

2 (1.7)

1 (0.8)

Oceania 1 (100.0)

1 (100.0)

0 (0.0)

0 (0.0)

0 (0.0)


5 (71.4)

1 (14.3)

0 (0.0)

1 (14.3)


0 (0.0)

0 (0.0)

0 (0.0)

0 (0.0)

Europe(Euro area) 4 (100.0)

3 (75.0)

0 (0.0)

0 (0.0)

1 (25.0)


2 (100.0)

1 (50.0)

0 (0.0)

0 (0.0)

1 (50.0)

All 134 (100.0)

111 (82.8)

17 (12.7)

2 (1.5)

4 (3.0)

Please select below to describe the CNH. (Select all that apply)

# of responded

CNH is useful to hedge CNY transaction

We sometimes use CNH because of the regulation of the CNY transaction, however

CNH is basically useless.

We do not use CNH because only CNY can be used for trade settlement. Others

Asia 96 (100.0)

21 (21.9)

5 (5.2)

63 (65.6)

7 (7.3)

Oceania 1 (100.0)

0 (0.0)

0 (0.0)

1 (100.0)

0 (0.0)


0 (0.0)

0 (0.0)

3 (60.0)

2 (40.0)


0 (0.0)

0 (0.0)

0 (0.0)

0 (0.0)

Europe(Euro area) 3 0 (0.0)

0 (0.0)

3 (100.0)

0 (0.0) (100.0)


2 0 (0.0)

0 (0.0)

1 (50.0)

1 (50.0) (100.0)

All 107 21 (19.6)

5 (4.7)

71 (66.4)

10 (9.3) (100.0)


FX market in China: 82.8%FX market in Hong Kong 12.7%

Offshore RMB-Yen market in Tokyo 1.7%

CNH is useful to hedge CNY: 19.6%We sometimes use CNH because of regulation, but CNH is basically useless: 5 %We do no use CNH because only CNY can be used for trade settlement: 66.4%

Choice of Invoice Currency by Japanese Production Subsidiaries in Asia• Question:

• To what extent Japanese production subsidiaries use RMB for trade invoicing? => Subsidiaries operating in Asia (and especially in China).

• 2 types of invoicing data:• Firm-level data (share):

• (1) Local procurements/sales; Imports from and exports to (2) Japan and (3) other countries.

• Product-level data (number of transactions):• (i) By trading partner (intra-firm trade or arm’s-length trade)• (ii) By destination countries

Sketch—Invoicing Decision by Japanese Production Subsidiaries—

Domestic Market

Euro Area

United States

Europe North America

Asia

JapanSubsidiary in China

Imports of intermediate inputs

Exports of production goods

490 34.8 48.6 16.6 365 34.1 45.9 19.7

133 36.9 54.2 8.9 106 35.0 55.7 9.3

19 38.2 31.4 30.4 6 31.0 31.3 37.7

28 35.2 50.9 13.9 21 50.9 33.7 8.7

16 40.8 50.5 8.8 8 59.4 29.1 11.5

277 33.3 47.4 19.3 206 32.2 42.5 25.4

17 29.9 38.8 31.3 18 26.2 49.7 24.1

492 28.0 47.9 24.1 342 26.0 50.3 23.7

135 36.4 49.1 14.5 96 31.7 52.6 15.7

19 42.8 26.2 31.0 6 31.7 23.2 45.2

28 14.8 54.7 30.5 20 17.6 55.5 27.0

16 30.6 58.1 11.3 8 4.5 91.3 4.3

276 25.4 44.7 29.9 197 26.0 46.1 27.9

18 6.8 91.2 2.1 15 10.8 72.6 16.6　Other Asia

Exports and Sales Destination

Source Country/RegionBreakdown

Number ofRespondents

(a) Exports toJapan (%)

(b) LocalSales (%)

(c) Exports toOthers (%)


(a) Exports toJapan (%)

(b) LocalSales (%)

(c) Exports toOthers (%)

　Korea

　ASEAN-6

　China

　Hong Kong

　Taiwan

Asia

　ASEAN-6

　Other Asia

　Hong Kong

　Taiwan

　Korea

Asia

　China

(b) Local Pro-curements (%)

(c) Importsfrom Others

(%)

2010 2014


(a) Importsfrom Japan

(%)

(b) Local Pro-curements (%)

(c) Importsfrom Others

(%)


(a) Importsfrom Japan

(%)

Trade Pattern: Subsidiaries in Asia

Trade Pattern—Japanese Production Subsidiaries in China—

Domestic Market


Asia


54.2% (2010) => 55.7% (2014)

49.1% (2010) => 52.6% (2014)

Euro Area

United States

36.9% (2010) => 35.0% (2014)

36.4% (2010) => 31.7% (2014)

8.9% (2010) => 9.3% (2014)

14.5% (2010) => 15.7% (2014)

Import fromForeign Countries

Export toForeign Countries

Questionnaire Survey Data (1)

• Invoice Decision of Production Subsidiaries:• We focus on the invoicing practices of Japanese production subsidiaries.

=> We obtained two types of data.

• [1] Firm-level data:• We obtain the firm-level data on invoice currency (share).

• Export/Sales: 3 destinations (to Japan, to local market, and to foreign countries (excluding Japan)).

• Import/Procurement: 3 sources (from Japan, from local market, and from foreign countries (excluding Japan)).

• No information by product and by trading partner.

Case 1: Electronics Subsidiary in Taiwan— Firm-level Data on Invoice Currency Share —

Electronics (Taiwan)

We obtained the firm-level data on invoice currency in exports to and in imports from 3 countries/regions (Japan, Local country, & Foreign Countries

Japan

Foreign Countries

Local Market

Export = 10%JPY= 30%USD= 70%Local= 0%

Import = 10%JPY= 20%USD= 80%Local= 0%

Export = 30%JPY= 0%USD= 95%Other= 5%

Import = 45%JPY= 10%USD= 90%Local= 0%

Procurement = 45%JPY= 10%USD= 45%Local=45%

Sales = 60%JPY= 0%USD= 25%Local=75%

We also obtained the export and import share of each destination/source country.

RMB Invoicing—Japanese Production Subsidiaries in China—

Domestic Market


Asia


60.8% (2010) => 68.0% (2014)

80.2% (2010) => 81.6% (2014)

Euro Area

United States

3.8% (2010) => 10.4% (2014)

0.8% (2010) => 13.9% (2014)

3.8% (2010) => 3.6% (2014)

2.3% (2010) => 5.2% (2014)

Import fromForeign Countries

Export toForeign Countries

Share of Invoice Currency in Production Subsidiaries' Procurements of Intermediate Inputs from Local Market

Number ofRespondents (a) Yen (%) (b) US Dollar

(%) (c) Euro (%) (d) Renminbi(%)

(e) LocalCurrency (%)

(f) Others(%)

319 11.8 28.9 0.3 20.3 36.9 1.8

95 8.6 20.9 0.2 68.0 2.1 0.2

4 10.0 56.3 0.0 0.0 33.8 0.0

18 24.3 18.2 0.6 0.8 56.1 0.0

7 21.4 20.1 0.7 0.0 57.7 0.0

182 12.6 35.4 0.3 0.1 48.7 2.9

13 1.5 7.3 0.0 0.0 90.0 1.2

2010 Survey

456 13.3 25.9 0.5 17.4 41.3 1.6

126 13.0 22.8 0.3 60.8 1.9 1.2

14 24.7 41.6 0.2 11.1 22.4 0.0

25 15.2 13.8 0.1 0.0 70.9 0.0

14 20.1 8.1 1.1 0.0 70.6 0.0

263 12.3 29.6 0.6 0.4 55.3 1.9

14 13.6 7.1 1.4 0.0 70.7 7.1　Other Asia

　ASEAN-6

　Korea

　Taiwan

　Hong Kong

　China

Asia

　Other Asia

　ASEAN-6

　Korea

　Taiwan

　Hong Kong

　China

Asia

2014 Survey

Share of Invoice Currency in Production Subsidiaries' Imports of Intermediate Inputs from Japan




(f) Others(%)

288 48.2 43.7 0.4 3.0 4.4 0.4

82 43.9 44.5 0.0 10.4 1.2 0.0

5 17.0 83.0 0.0 0.0 0.0 0.0

18 49.2 28.7 0.0 0.0 21.8 0.3

8 71.9 10.6 0.0 0.0 17.5 0.0

159 49.0 47.0 0.6 0.0 2.7 0.7

16 59.4 28.6 0.0 0.0 11.9 0.1

2010 Survey

422 54.0 40.3 0.4 1.0 3.9 0.4

110 48.1 47.7 0.0 3.8 0.0 0.5

16 57.8 41.6 0.0 0.0 0.6 0.0

27 63.2 32.6 0.0 0.0 4.3 0.0

13 87.3 11.2 0.0 0.0 1.5 0.0

243 53.5 39.5 0.7 0.0 6.1 0.1

13 56.5 35.9 0.0 0.0 0.0 7.5　Other Asia

　ASEAN-6

　Korea

　Taiwan

　Hong Kong

　China

Asia

　Other Asia

　ASEAN-6

　Korea

　Taiwan

　Hong Kong

　China

Asia

2014 Survey

Share of Invoice Currency in Production Subsidiaries' Importsof Intermediate Inputs from Other Countries (exc Japan)




(f) Others(%)

205 6.8 80.4 4.2 0.7 4.5 3.4

34 8.9 84.2 2.9 3.6 0.0 0.3

5 0.0 82.0 0.0 2.0 16.0 0.0

8 8.8 79.4 11.9 0.0 0.0 0.0

4 12.5 87.5 0.0 0.0 0.0 0.0

141 6.1 80.7 4.1 0.0 5.3 3.8

13 9.0 64.5 6.4 0.0 7.7 12.5

2010 Survey

282 6.1 79.0 5.6 1.0 4.9 3.5

49 4.0 77.5 11.9 3.8 0.5 2.2

12 12.8 68.6 0.3 4.6 13.8 0.1

12 1.5 94.8 0.4 0.0 1.7 1.7

5 16.0 74.2 9.8 0.0 0.0 0.0

191 6.6 79.4 4.3 0.1 5.6 4.0

13 1.1 74.8 8.2 0.4 7.7 7.8　Other Asia

　ASEAN-6

　Korea

　Taiwan

　Hong Kong

　China

Asia

　Other Asia

　ASEAN-6

　Korea

　Taiwan

　Hong Kong

　China

Asia

2014 Survey

Share of Invoice Currency in Production Subsidiaries' Sales in Local Market




(f) Others(%)

299 3.2 23.2 0.6 23.8 47.2 2.0

87 2.5 13.1 0.9 81.6 0.9 1.0

4 5.0 84.5 0.0 0.0 10.5 0.0

19 2.9 19.7 0.0 0.0 77.4 0.0

8 10.1 14.0 4.4 0.0 71.5 0.0

168 3.5 29.4 0.3 0.0 64.2 2.5

13 0.0 1.7 0.0 0.0 90.6 7.7

2010 Survey

414 4.9 21.5 0.2 21.9 50.6 0.9

112 2.2 13.5 0.3 80.2 3.6 0.3

14 0.0 49.5 0.0 0.0 50.5 0.0

26 5.4 17.9 0.1 0.0 76.7 0.0

12 9.6 16.3 0.0 0.8 73.3 0.0

234 6.5 25.4 0.3 0.3 66.1 1.4

16 0.0 6.4 0.0 0.0 93.6 0.0　Other Asia

　ASEAN-6

　Korea

　Taiwan

　Hong Kong

　China

Asia

　Other Asia

　ASEAN-6

　Korea

　Taiwan

　Hong Kong

　China

Asia

2014 Survey

Share of Invoice Currency in Production Subsidiaries' Exports to Japan




(f) Others(%)

209 37.8 52.2 0.0 4.7 4.8 0.4

71 39.3 45.4 0.0 13.9 1.4 0.0

5 16.0 84.0 0.0 0.0 0.0 0.0

12 49.2 42.5 0.0 0.0 8.3 0.0

4 100.0 0.0 0.0 0.0 0.0 0.0

113 35.8 56.2 0.0 0.0 7.2 0.8

4 0.0 100.0 0.0 0.0 0.0 0.0

2010 Survey

313 46.0 48.0 0.2 0.2 5.6 0.0

93 47.8 50.8 0.7 0.8 0.0 0.0

12 29.6 70.4 0.0 0.0 0.0 0.0

17 43.5 56.5 0.0 0.0 0.0 0.0

10 79.0 10.0 0.0 0.0 11.0 0.0

177 43.8 46.8 0.0 0.0 9.3 0.0

4 75.0 25.0 0.0 0.0 0.0 0.0　Other Asia

　ASEAN-6

　Korea

　Taiwan

　Hong Kong

　China

Asia

　Other Asia

　ASEAN-6

　Korea

　Taiwan

　Hong Kong

　China

Asia

2014 Survey

Share of Invoice Currency in Production Subsidiaries' Exports to Other Countries (exc Japan)




(f) Others(%)

220 6.0 80.7 2.9 1.7 5.4 3.3

54 7.3 79.6 4.5 5.2 1.9 1.6

5 4.0 93.0 1.0 0.0 2.0 0.0

16 6.3 79.0 0.9 5.7 6.3 1.9

3 6.7 93.3 0.0 0.0 0.0 0.0

133 5.9 80.5 2.7 0.0 7.4 3.5

9 0.1 82.8 1.1 0.0 0.0 16.0

2010 Survey

323 8.6 77.5 3.2 0.7 6.6 3.4

68 8.4 76.5 4.6 2.3 1.4 6.8

12 5.4 70.8 0.4 2.5 20.8 0.0

19 5.5 82.5 1.6 0.0 10.3 0.1

8 16.9 69.5 7.4 5.6 0.6 0.0

208 9.1 77.2 3.0 0.0 7.6 3.0

8 0.0 100.0 0.0 0.0 0.0 0.0　Other Asia

　ASEAN-6

　Korea

　Taiwan

　Hong Kong

　China

Asia

　Other Asia

　ASEAN-6

　Korea

　Taiwan

　Hong Kong

　China

Asia

2014 Survey

• [2] Product-level data:• We obtain the product-level information on top 3 products in each of 3

regions (Japan, local country and foreign countries).• Subsidiary’s exports:

• Which product? => Name of the export product.• “Intermediate input” or “Final consumption goods”?• “Homogeneous” or “Differentiated” products? (<= Rauch, 1999)

• Trading partner? => “Intra-firm” or “Arm’s length” trade?• Destination country?

• Subsidiary’s imports:• We obtain the same information on “which product?” “trading partner?” and “source

country?” in subsidiary’s imports of intermediate goods.

Questionnaire Survey Data (2)

Case 2: Electronics Subsidiary in Taiwan— “Product-level” Data on Invoice Currency —

Electronics (Taiwan) Japan

Local Market

Home bakery (Headquarter: HQ) (USD)Car speaker (HQ) (USD)Cooking apparatus (HQ) (USD)

LCD Panel (Group company) (USD)Plasma Panel (HQ) (USD)Mecha case (HQ) (JPY)

Urethan agent (Local company) (Local currency)Shell steal (Local company) (Local currency)Printed board (Local company) (Local currency)

Air conditioner (Group company) (Local currency)TV (Group company) (Local currency)Refrigerator (Group company) (Local currency)

Singapore

China

Thai land UK USA

Fridge compressor (Group company) (USD)

Air conditioner compressor (Group company) (USD)Motor (Group company) (USD)

Home bakery (Group company) (UK Pound)

Washing machine (Group company) (USD) Car audio (Group company) (USD)

RMB Invoicing in Intra-Firm Trade—Japanese Production Subsidiaries in China: Trade with Japan—

Asia


Head Office

Group Company

Sogo Shosha

Others

2010 20140.8%(1)

11.5%(11)

2.8%(1)

11.1%(3)

4.9%(2)

11.5%(3)

Head Office

Group Company

Sogo Shosha

Others 22.2%(2)

0.0%(0)

Subsidiary’s Imports from Japan

Subsidiary’s Exports to Japan

2010 20141.8%(2)

16.0%(13)

0.0%(0)

5.9%(1)

0.0%(0)

0.0%(0)

0.0%(0)

0.0%(0)

RMB Invoicing in Intra-Firm Trade—Japanese Production Subsidiaries in China: Trade with Foreign Countries—

Asia

Subsidiary in China

Customer

Group Company

Distributor

Others

2010 20142.7%(1)

0.0%(0)

0.0%(0)

3.4%(1)

ForeignCompany

Group Company

Others 0.0%(0)

50.0%(3)

Subsidiary’s Imports from Foreign countries

Subsidiary’s Exports to Foreign Countries

2010 20146.7%(2)

0.0%(0)

5.3%(3)

11.4%(5)

0.0%(0)

14.3%(1)

0.0%(0)

0.0%(0)

North America

Europe

Other Asia

Invoice Currency Share in Local Procurements and Sales

Local Procure- Asia China ASEAN-6 ment (%) 2010 2014 2010 2014 2010 20141. From Local Company1. JPY 2.1 2.2 2.7 1.2 1.7 3.02. USD 16.2 17.7 11.5 7.6 20.7 25.63. Euro 0.0 0.0 0.0 0.0 0.0 0.04. Renminbi 23.7 27.4 84.5 86.5 0.0 0.05. Local 53.9 50.8 1.3 4.7 71.9 70.06. Others 4.1 1.9 0.0 0.0 5.7 1.3TOTAL 100.0 100.0 100.0 100.0 100.0 100.02. From Group Company1. JPY 28.0 11.6 20.0 12.5 23.1 13.02. USD 42.7 39.1 53.3 12.5 41.8 47.83. Euro 0.7 0.0 0.0 0.0 0.0 0.04. Renminbi 5.6 17.4 26.7 75.0 0.0 0.05. Local 22.4 29.0 0.0 0.0 34.1 34.86. Others 0.7 2.9 0.0 0.0 1.1 4.3TOTAL 100.0 100.0 100.0 100.0 100.0 100.03. From Other Company1. JPY 13.5 3.4 9.1 0.0 13.4 0.02. USD 44.9 72.4 27.3 50.0 41.8 80.03. Euro 3.4 0.0 9.1 0.0 3.0 0.04. Renminbi 7.9 10.3 54.5 50.0 1.5 0.05. Local 24.7 10.3 0.0 0.0 32.8 15.06. Others 5.6 3.4 0.0 0.0 7.5 5.0TOTAL 100.0 100.0 100.0 100.0 100.0 100.0

Local Sales Asia China ASEAN-6(Share:%) 2010 2014 2010 2014 2010 20141. To Customer1. JPY 1.4 1.6 0.0 3.7 1.6 0.62. USD 18.6 21.5 10.4 7.3 24.2 30.03. Euro 0.0 0.3 0.0 0.0 0.0 0.04. Renminbi 21.8 21.8 88.7 85.4 0.4 0.05. Local 53.8 53.6 0.0 2.4 67.6 68.36. Others 4.4 1.2 0.9 1.2 6.1 1.1TOTAL 100.0 100.0 100.0 100.0 100.0 100.02. To Group Company1. JPY 7.0 3.3 5.7 2.5 7.4 4.82. USD 30.1 26.7 14.3 17.5 34.0 38.13. Euro 0.7 4.4 0.0 7.5 1.1 2.44. Renminbi 18.9 28.9 77.1 65.0 0.0 0.05. Local 41.3 35.6 0.0 7.5 55.3 54.86. Others 2.1 1.1 2.9 0.0 2.1 0.0TOTAL 100.0 100.0 100.0 100.0 100.0 100.03. To Distributor1. JPY 0.0 0.0 0.0 0.0 0.0 0.02. USD 8.1 27.5 0.0 11.1 19.0 32.13. Euro 0.0 2.5 0.0 0.0 0.0 3.64. Renminbi 48.4 20.0 100.0 88.9 0.0 0.05. Local 41.9 50.0 0.0 0.0 81.0 64.36. Others 1.6 0.0 0.0 0.0 0.0 0.0TOTAL 100.0 100.0 100.0 100.0 100.0 100.04. To Other Company1. JPY 6.7 0.0 0.0 0.0 12.5 0.02. USD 20.0 100.0 0.0 100.0 37.5 100.03. Euro 0.0 0.0 0.0 0.0 0.0 0.04. Renminbi 13.3 0.0 100.0 0.0 0.0 0.05. Local 53.3 0.0 0.0 0.0 37.5 0.06. Others 6.7 0.0 0.0 0.0 12.5 0.0TOTAL 100.0 100.0 100.0 100.0 100.0 100.0

Production Subsidiaries

Local Procurement

Local Sales

Exports to Asia China ASEAN-6 Japan (%) 2010 2014 2010 2014 2010 20141. To Japanese Head Office1. JPY 46.3 31.3 51.8 30.9 42.4 25.92. USD 45.8 60.4 46.4 53.1 45.5 69.63. Euro 0.3 0.0 0.0 0.0 0.5 0.04. Renminbi 0.5 5.7 1.8 16.0 0.0 0.05. Local 6.8 2.6 0.0 0.0 11.1 4.56. Others 0.3 0.0 0.0 0.0 0.5 0.0TOTAL 100.0 100.0 100.0 100.0 100.0 100.02. To Group Company1. JPY 50.8 38.1 45.5 41.2 44.7 37.52. USD 46.0 50.0 54.5 47.1 50.0 50.03. Euro 0.0 0.0 0.0 0.0 0.0 0.04. Renminbi 0.0 2.4 0.0 5.9 0.0 0.05. Local 1.6 9.5 0.0 5.9 2.6 12.56. Others 1.6 0.0 0.0 0.0 2.6 0.0TOTAL 100.0 100.0 100.0 100.0 100.0 100.03. To Japanese Sogo Shosha1. JPY 8.3 64.3 33.3 100.0 0.0 55.62. USD 91.7 28.6 66.7 0.0 100.0 33.33. Euro 0.0 0.0 0.0 0.0 0.0 0.04. Renminbi 0.0 0.0 0.0 0.0 0.0 0.05. Local 0.0 7.1 0.0 0.0 0.0 11.16. Others 0.0 0.0 0.0 0.0 0.0 0.0TOTAL 100.0 100.0 100.0 100.0 100.0 100.04. To Other Company1. JPY 42.1 22.2 40.0 0.0 50.0 40.02. USD 42.1 55.6 60.0 100.0 33.3 20.03. Euro 0.0 0.0 0.0 0.0 0.0 0.04. Renminbi 0.0 0.0 0.0 0.0 0.0 0.05. Local 5.3 0.0 0.0 0.0 8.3 0.06. Others 10.5 22.2 0.0 0.0 8.3 40.0TOTAL 100.0 100.0 100.0 100.0 100.0 100.0

Imports from Asia China ASEAN-6 Japan (%) 2010 2014 2010 2014 2010 20141. From Japanese Head Office1. JPY 58.8 54.4 53.0 43.8 57.5 58.62. USD 38.0 39.7 45.5 44.8 37.7 38.53. Euro 0.4 0.0 0.0 0.0 0.7 0.04. Renminbi 0.2 3.6 0.8 11.5 0.0 0.05. Local 2.2 2.3 0.0 0.0 3.7 3.06. Others 0.4 0.0 0.8 0.0 0.4 0.0TOTAL 100.0 100.0 100.0 100.0 100.0 100.02. From Group Company1. JPY 51.9 43.9 36.1 33.3 47.8 53.62. USD 46.5 48.5 58.3 51.9 52.2 42.93. Euro 0.0 0.0 0.0 0.0 0.0 0.04. Renminbi 0.8 4.5 2.8 11.1 0.0 0.05. Local 0.8 3.0 2.8 3.7 0.0 3.66. Others 0.0 0.0 0.0 0.0 0.0 0.0TOTAL 100.0 100.0 100.0 100.0 100.0 100.03. From Japanese Sogo Shosha1. JPY 56.9 54.5 41.5 61.5 59.5 47.92. USD 38.7 40.0 53.7 26.9 35.7 47.93. Euro 0.0 0.0 0.0 0.0 0.0 0.04. Renminbi 1.5 2.7 4.9 11.5 0.0 0.05. Local 2.9 2.7 0.0 0.0 4.8 4.26. Others 0.0 0.0 0.0 0.0 0.0 0.0TOTAL 100.0 100.0 100.0 100.0 100.0 100.04. From Other Company1. JPY 53.4 52.0 44.4 0.0 52.5 55.62. USD 32.8 44.0 33.3 100.0 35.0 44.43. Euro 0.0 0.0 0.0 0.0 0.0 0.04. Renminbi 3.4 0.0 22.2 0.0 0.0 0.05. Local 6.9 4.0 0.0 0.0 7.5 0.06. Others 3.4 0.0 0.0 0.0 5.0 0.0TOTAL 100.0 100.0 100.0 100.0 100.0 100.0

Invoice Currency Share in Imports from and Exports to Japan


Imports from Japan

Exports to Japan

Exports to Asia China ASEAN-6 Foreign (%) 2010 2014 2010 2014 2010 20141. To Customers1. JPY 7.3 9.6 20.0 18.8 3.9 7.42. USD 82.9 86.0 70.0 81.3 87.4 85.23. Euro 1.6 0.0 0.0 0.0 2.4 0.04. Renminbi 1.6 0.0 6.7 0.0 0.0 0.05. Local 4.7 3.7 0.0 0.0 3.9 6.26. Others 2.1 0.7 3.3 0.0 2.4 1.2TOTAL 100.0 100.0 100.0 100.0 100.0 100.02. To Group Companies1. JPY 6.0 5.0 3.5 0.0 8.1 6.42. USD 77.2 75.7 78.9 72.7 74.3 78.23. Euro 4.3 5.7 5.3 11.4 4.1 3.84. Renminbi 1.3 3.6 5.3 11.4 0.0 0.05. Local 7.3 7.1 3.5 2.3 9.5 9.06. Others 3.9 2.9 3.5 2.3 4.1 2.6TOTAL 100.0 100.0 100.0 100.0 100.0 100.03. To Distributors1. JPY 0.0 2.8 0.0 0.0 0.0 0.02. USD 88.4 88.9 91.7 85.7 84.2 95.53. Euro 0.0 2.8 0.0 0.0 0.0 4.54. Renminbi 0.0 5.6 0.0 14.3 0.0 0.05. Local 9.3 0.0 0.0 0.0 15.8 0.06. Others 2.3 0.0 8.3 0.0 0.0 0.0TOTAL 100.0 100.0 100.0 100.0 100.0 100.04. To Others1. JPY 11.8 0.0 0.0 0.0 18.2 0.02. USD 64.7 100.0 0.0 100.0 72.7 100.03. Euro 0.0 0.0 0.0 0.0 0.0 0.04. Renminbi 0.0 0.0 0.0 0.0 0.0 0.05. Local 0.0 0.0 0.0 0.0 0.0 0.06. Others 23.5 0.0 0.0 0.0 9.1 0.0TOTAL 100.0 100.0 0.0 100.0 100.0 100.0

Imports from Asia China ASEAN-6 Abroad (%) 2010 2014 2010 2014 2010 20141. Foreign Company1. JPY 3.0 1.1 2.7 0.0 2.7 1.52. USD 80.5 88.8 78.4 100.0 81.9 88.83. Euro 8.7 6.1 16.2 0.0 8.7 6.04. Renminbi 0.9 0.0 2.7 0.0 0.0 0.05. Local 5.2 2.2 0.0 0.0 4.7 1.56. Others 1.7 1.7 0.0 0.0 2.0 2.2TOTAL 100.0 100.0 100.0 100.0 100.0 100.02. Group Company1. JPY 7.2 3.4 4.5 0.0 6.3 5.42. USD 80.3 85.3 77.3 93.1 80.2 82.43. Euro 2.6 4.3 9.1 3.4 1.0 5.44. Renminbi 0.0 0.9 0.0 3.4 0.0 0.05. Local 2.6 1.7 4.5 0.0 3.1 1.46. Others 7.2 4.3 4.5 0.0 9.4 5.4TOTAL 100.0 100.0 100.0 100.0 100.0 100.03. Others1. JPY 2.4 2.3 0.0 16.7 3.2 0.02. USD 80.0 88.6 83.3 33.3 79.4 96.83. Euro 4.7 0.0 11.1 0.0 1.6 0.04. Renminbi 0.0 6.8 0.0 50.0 0.0 0.05. Local 4.7 0.0 0.0 0.0 6.3 0.06. Others 8.2 2.3 5.6 0.0 9.5 3.2TOTAL 100.0 100.0 100.0 100.0 100.0 100.0

Invoice Currency Share in Imports from and Exports to Other Countries


Imports from Foreign

Exports to Foreign

Asia GreaterChina ASEAN6 Asia Greater

China ASEAN6

1. To U.S. 1. JPY 0.0 0.0 0.0 0 0 02. USD 93.3 94.1 91.7 28 16 113. Euro 0.0 0.0 0.0 0 0 04. RMB 3.3 5.9 0.0 1 1 05. Local 3.3 0.0 8.3 1 0 16. Others 0.0 0.0 0.0 0 0 0TOTAL 100.0 100.0 100.0 30 17 12

2. To EU 1. JPY 4.5 11.1 0.0 1 1 02. USD 59.1 33.3 70.0 13 3 73. Euro 36.4 55.6 30.0 8 5 34. RMB 0.0 0.0 0.0 0 0 05. Local 0.0 0.0 0.0 0 0 06. Others 0.0 0.0 0.0 0 0 0TOTAL 100.0 100.0 100.0 22 9 10

3. To Others 1. JPY 0.0 0.0 0.0 0 0 02. USD 86.7 100.0 75.0 13 3 63. Euro 6.7 0.0 12.5 1 0 14. RMB 0.0 0.0 0.0 0 0 05. Local 0.0 0.0 0.0 0 0 06. Others 6.7 0.0 12.5 1 0 1TOTAL 100.0 100.0 100.0 15 3 8

4. To Asia 1. JPY 8.2 7.9 7.3 16 5 92. USD 82.6 79.4 85.5 161 50 1063. Euro 0.0 0.0 0.0 0 0 04. RMB 2.6 7.9 0.0 5 5 05. Local 4.6 3.2 5.6 9 2 76. Others 2.1 1.6 1.6 4 1 2TOTAL 100.0 100.0 100.0 195 63 124

Share Number of transactionsProduction Subsidiary'sExports to:2014 Survey Data:

Invoice Currency Choice in Exports of Production Subsidiaries in Asia, in Greater China (Ch, HK, Tw), and in ASEAN6

Japanese subsidiaries in Asia, Greater China, and ASEAN6:

• In exports to foreign countries, intra-Asian trade accounts for the largest share.

Choice of invoice currency:• 80 percent or more are invoiced

in U.S. dollar.• RMB is used only in Greater

China area.

Concluding Remarks• Findings:

• Although RMB is extensively used for local sales and procurement in China, Japanese MNCs in China mainly use the U.S. dollar in trade with other countries. Yen is used mainly for trade with Japan.

• Little evidence is obtained on the growing use of RMB in Japanese MNCs’ international trade along the production chain in Asia. Possible exception is intra-firm trade between China and Japan.

• Implications:• RMB transactions started to grow gradually in intra-firm trade between

China and Japan. • The RMB transactions will be growing further if it becomes easier for

MNCs to conduct marry and netting for their trade settlement.

the international use of the renminbi: evidence from the

Documents